One of the biggest plusses that the foreign exchange market offers traders consists of the fact that currencies trade twenty four hours a day, five days a week.
This means that you can start trading Sunday afternoon EST and continue trading non stop all the way until Friday afternoon EST. This round the clock trading feature gives traders with workaholic tendencies a perfect market place in which to operate.
The reason this opportunity exists has to do with time zones and where markets open in different parts of the world. For example, because the day begins in the Far East, the forex market opens in New Zealand, Australia and Asia first, then Europe and then North America.
Nevertheless, poor times to trade also exist, and so the sections below will cover the forex market's time table and the best and worst times to trade. All times mentioned will be expressed in Eastern Standard Time or EST.
World Forex Markets Time Table
The foreign exchange market opens at 5:00 PM in Sydney, Australia, although some traders in New Zealand will make prices an hour earlier at their 4:00 PM open. Wellington then closes at midnight, while Sydney then closes at 1:00 AM.
Two hours after the Sydney open, the forex market opens in Tokyo at 7:00 PM and closes at 2:00 AM. Singapore and Hong Kong open two hours after Tokyo at 9:00 PM and close at 5:00 AM.
In the European markets, Frankfurt opens at 2:00 AM and closes at 10:00 AM, while the major London forex trading session opens at 3:00 AM and closes at 11:00 AM.
East Cost North American markets open in New York at 8:00 AM and close at 5:00PM. Chicago trading is one hour later and California trading is three hours later.
Best Times to Trade the Foreign Exchange Market
You may have noticed when reading the previous section that at several times of the day more than one market is open at the same time. These overlapping times usually provide the greatest degree of liquidity in certain currency pairs, as well as wider pip range movements. This tends to make these more liquid periods better times to trade, theoretically at least.
Basically, since more liquidity and a higher volume of trades will often be more beneficial to the speculative forex trader, certain times when trading is heavier in particular currency pairs can give a trader the edge needed to be profitable. This is especially true of traders using short term strategies like scalping or day trading.
Such liquid times would include the important 8:00 AM to 11:00 AM period when both New York and European markets in Frankfurt and London are open for business.
Also, if you are trading EUR/USD, GBP/USD, USD/CHF, EUR/GBP, EUR/CHF or GBP/CHF, then the market in these currency pairs would probably be the most active because they represent the major currencies involving the United States and European.
Another good time to trade in order to take advantage of several different markets being open simultaneously, is between 12:00 Midnight and 3:00 AM.
Sydney is still open until 1:00 AM, while the Tokyo, Singapore and Hong Kong forex markets continue trading, and the Frankfurt and London markets open at 2:00 AM and 3:00 AM respectively.
This time period can be particularly active for the EUR/JPY, USD/JPY, AUD/USD, NZD/USD, AUD/JPY, AUD/NZD and EUR/AUD currency pairs.
Trading Times to Watch Out For
Between 5:00 PM and 7:00 PM, the New York forex market has closed and the only other markets which are open are Chicago until 6:00 PM and the West Coast offices of certain U.S. banks that may stay open as late as 7:00PM. You can also trade into the thinner markets in New Zealand that opens at 4:00pm and Australia which opens at 5:00 PM.
This represents a window of time during the trading day, when the market could be thin and so price spreads may widen significantly. Basically, avoiding trading during illiquid time periods and in highly volatile markets can save you money, both in terms of your trading position and in the amount of the bid offer spread you may be quoted for the transaction.
Other times which may not be as advantageous to trade include the Sunday night session, as well as Fridays when the market is looking forward to the weekend and so typically trades counter-trend as positions are squared.
Another risky trading time is when important numbers such as U.S. Non-Farm Payrolls come out. If the actual number differs considerably from the market's consensus expectation, then the exchange rate can shift rapidly to discount the new information as fast as possible.